Most Americans aren’t surprised when they discover that the average tax refund is significantly smaller than it was a year ago after weeks of warnings.
The average refund for early filers whose forms were completed by the Federal Revenue Service through March 10 was $2,972, an 11% decrease from the prior year. This is according to the most recent IRS statistics posted online on Friday.
Federal Tax Refund 2023
Throughout almost seven weeks of tax season, the IRS has granted approximately 4 million more refunds than it did during the same period last year, an increase of 8.5%.
When do refund funds arrive in bank accounts? Refunds are deposited via direct deposit each business day, Monday through Friday. But not on weekends or holidays.
A refund check could also arrive via mail on a weekend.
If you receive your refund via direct deposit, experts recommend checking with your bank to see when the funds will be available in your account, as this might vary from bank to bank.
Direct deposit can take up to 21 days to process a federal income tax refund. Yet, reimbursements for e-filed tax returns are frequently issued in a shorter time.
“If you filed on paper and are expecting a refund, it could take up to four weeks to process your return,” an IRS notice released online on January 30 states.
Undoubtedly, many individuals are disappointed to receive a lower refund, even if they knew it was a possibility. The loss of the substantial Advance Child Tax Credit and the recovery rebate credit on 2022 returns would reduce refunds for many filers.
The rise in the number of tax returns early in the tax season is somewhat puzzling, especially considering the cessation of significant tax advantages related to the pandemic.
By March 10, over 49.2 million tax refunds had been distributed to taxpayers across the US. Why are so many more tax refunds being granted this year than last? The IRS has not provided an explanation.
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IRS Processing Delays
After a few difficult years since the epidemic began in 2020, the IRS processing system experienced enormous delays and a significant backlog of returns.
At the beginning of this tax season, on January 23, when the IRS began processing e-filed returns, it was anticipated that the IRS would be in a better position to handle the season.
Some preliminary data also indicates that tax professionals are e-filing more tax returns than they did a year ago, an increase of 6.1%, which expedites the processing of tax returns and the payment of tax refunds.
The Inflation Reduction Act, which was signed into law in August, allocated approximately $80 billion to the IRS over a 10-year period. Priorities of Treasury Secretary Janet Yellen for the IRS were clearing the backlog of tax returns, enhancing customer service, modernizing technology, and adding more employees.
The IRS previously anticipated that the majority of Earned Income Tax Credit and Additional Child Tax Credit-related refunds would be available in taxpayer bank accounts or on debit cards by February 28 if taxpayers filed early, opted for direct deposit, and had no other issues with their tax returns.
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